Psychology
The Sunk Cost Fallacy and Irrational Escalation in Business Decisions
Quick fact
In a classic experiment, people were more likely to continue a failing project when they had made a prior investment, even when new information showed the project was doomed. This bias can lead companies to pour billions into projects that should have been abandoned long ago.
Why this is interesting
Have you ever sat through a terrible movie just because you paid for the ticket? That’s the sunk cost fallacy—and it happens in business all the time, but with millions of dollars at stake.